What/how do you charge Amended return and more

[mrichman333]

OK, I always have a hard time with pricing. I try to set a minimum $ for a return schedules like C....

But I always find myself not charging that amount once I see it didn't take much time and I calculate what it comes to an hour.

What do you do?

Also I just did a amended for someone, actually two because they didn't realize they could claim their parents whom they support and whom live with them on top of it.

The parents only needed to file to get a refund so I amended theirs, took minutes just changing the exemptions then amended the daughters just adding the parents again just minutes. But I know other preparers charge a lot for amended returns.

What/how do you charge for this type of return?

Thanks

[GeneInAlabama]

I charge $100 for an amended return and if it takes more than an hour, I charge by the hour at $100 hour. (I have to estimate the time because I am a one man office and I estimate how long it would take me if I had no interruptions which I always do.)

[Lion EA]

I try to charge a base $100 plus any new forms, schedules, worksheets -- if it was obviously the client's error. If the client is a PITA or this isn't the first time they've forgotten to bring in the 1099R for the distribution they took or the second/third 1098 because they refinanced without telling me, for instance, I aim for half the original cost or more. If the client doesn't see it as their fault (IRS issue, I didn't question them enough, etc.), I lower it considerably for a continuing client based on their perception of the problem and how much I want to keep them. I hate doing amendments. If I'm going to do it for free or cheap, it goes to the bottom of my stack.

[mrichman333]

A $100 each return was what I was thinking. I forgot to mention they also pay big medical expenses for their parents so they are due Thousands.

I have a few single people with one w-2 and nothing else at all, I have been charging them $50 for about the last 4 years.

I looked through my records and see there a lot of people that I have been charging the same price for 3 years, next year prices are going up

[ILLMAS]

Existing clients I usually do it for free, not that have done many free ones anyway. New client 1040X fee starts at $125 which also includes the state.

[MsTabbyKats]

I charge based on what has to be done. In this case ....did you recommend the amendment? Did you do the originals for both? If so...they may wonder why you didn't recommend this before...so I wouldn't go overboard.

[Jack from Ohio]

Anyone who only charges by the hour is robbing themselves.

[mrichman333]

I charge based on what has to be done. In this case ....did you recommend the amendment? Did you do the originals for both? If so...they may wonder why you didn't recommend this before...so I wouldn't go overboard.

The sister was doing the parents return. The parents sold their home early in 2012, and had a $200,000 non taxable gain , my client thought that excluded her from being able to claim them.

[Jack from Ohio]

The sister was doing the parents return. The parents sold their home early in 2012, and had a $200,000 non taxable gain , my client thought that excluded her from being able to claim them.

Minimum $100. Not for what I would do, but for knowing what to do.

[BulldogTom]

^{I try to charge a base $100 plus any new forms, schedules, worksheets -- if it was obviously the client's error.}

^{We charge $75 plus any new schedules if it is a return we prepared. If not a current client, we charge full price for the original return, plus $75 (and any additonal schedules) for the amended. After a few "oh, I forgot to tell you about this form" calls from the client, they get used to bringing everything in for their appointment, because I don't normally lower or waive that charge.}

^Tom

^{Hollister, CA}

[Jack from Ohio]

http://www.smallbusinessdelivered.com/hourly-pricing-9-reasons-to-stop-charging-hourly-rates.html

9 Reasons To Stop Charging Hourly Rates

When’s the last time you walked into your dentist’s or accountant’s office and said, “I want to buy some hours”? I’d bet some pretty good money that it was never. Instead, you ask to have a painful tooth checked or your taxes done.

That’s because people don’t buy hours…they buy solutions. Hours are an expense…solutions are an investment. And you always want to be talking about the investment.

In fact, hourly rates are rarely in your client’s best interest-or yours. For you, hourly rates…

· Double the trouble. Giving estimates with hourly rates means the prospect can take issue with both the rate itself and the number of hours you estimate. So now they have two fronts to try to needle you about when they want a lower price.

· Cause sticker shock at invoice time. Folks who don’t do the type of work you do or who don’t bother to track how much time they spend on similar tasks are often shocked at the number of hours it takes.

· Instantly brand you. Prospects want a fast and easy decision. If your hourly rate is much lower than the competition’s, you must be an amateur. If it’s higher, then you’re the “expensive” option.

Remember, the prospect doesn’t know it’ll take the competitor take twice as long to do the work or that you automatically include something that they don’t. And since quality of work is so subjective, they may not even bother trying to judge it…because it’s much easier to judge based on price.

· Penalize you for experience. It’s ironic-the more you work with a client, the faster and better you’ll naturally get at their projects…but since you’re paid by the hour, you end up making less. Maybe I’m crazy, but that kind of math just doesn’t add up.

· Involve tracking every smidgen of time. Every phone call you take while you’re in the middle of something else. Every email you write. Heck, even the time you spent brainstorming on the way to the grocery store…are you having fun yet?!

· Mean renegotiating. If you’re going to keep paying the bills, hourly rates eventually have to rise. But telling clients you’re raising them is about as much fun as a root canal. And if they’re a particularly big client, you may end up having to justify the increase, negotiate your new rate, sign a new contract and so on. Every year or two.

· Occasionally spark jealousy. A client once made a snide comment that I should be rolling in the dough, given my hourly rate. So if you work with folks who get a salary, inevitably some will divide it out to an hourly rate and compare it with yours.

Of course, they don’t get that you’re factoring in health insurance, taxes, expenses and so forth that they get in addition to their regular paycheck. All they see is that you seem to be making more than they do. And the resulting attitude can be a pain in the arse to deal with-especially when they DON’T say something and you’re wondering what’s wrong.

· Undervalue what you provide. What’s a new $20,000 client worth…especially over time? Or to have a professional-looking website presence that builds credibility and trust? To finally be pain-free? Or to finally find the career or relationship of their dreams?

Granted, it’s harder to judge worth in some cases. But the value of the solution you provide is certainly worth more than an hourly rate.

· Mean your income is forever limited by the number of hours you can work and the hourly rate you feel comfortable charging. Enough said.

[kcjenkins]

My thinking is similar to Jack's, that it's not really about the time involved in the amendment but about your knowledge in knowing how and why and when to amend. And as he said, basing it on time alone will Penalize you for experience. Time may be a factor in the way you set your base fee for a schedule, but it should not be the only factor. Or even the primary one, when it comes to amendments, especially. Likelihood of needing followup correspondence is, IMHO, a more important factor, for example.

[Gail in Virginia]

Excellent article, Jack! Thanks for sharing.

[mrichman333]

Yes great article. thanks everyone for all the input.

[HV Ken]

It takes at least as long to do the data entry for an amended return as it does for an original return. Amended returns also allow you to base your fee on the refund, which you cannot do on original returns. If you pick up a new client, and notice a previous return was done wrong, get them $2000 back and charge them $400 (as an example), they are ecstatic and you are well compensated for your knowledge and they also become your client going forward.

[Terry D EA]

the only time I charge an hourly amount is if I have to do bookkeeping. Other than that, everything is per form taking into consideration knowledge. For amended returns I charge the same as creating an original as almost the same amount of time is involved.

[mrichman333]

It takes at least as long to do the data entry for an amended return as it does for an original return. Amended returns also allow you to base your fee on the refund, which you cannot do on original returns. If you pick up a new client, and notice a previous return was done wrong, get them $2000 back and charge them $400 (as an example), they are ecstatic and you are well compensated for your knowledge and they also become your client going forward.

I like that

[mrichman333]

the only time I charge an hourly amount is if I have to do bookkeeping. Other than that, everything is per form taking into consideration knowledge. For amended returns I charge the same as creating an original as almost the same amount of time is involved.

I need to get better at charging

[Jack from Ohio]

I need to get better at charging

You are a professional and deserve to charge according to your skills, knowledge and experience. To undercharge is to steal from yourself.

I instituted a 25% increase in my base fee. One complaint, lost one client, had one question why and 236 that did not even hesitate when I told them the amount.

[mrichman333]

You are a professional and deserve to charge according to your skills, knowledge and experience. To undercharge is to steal from yourself.

I instituted a 25% increase in my base fee. One complaint, lost one client, had one question why and 236 that did not even hesitate when I told them the amount.

I agree, my problem is I'm always saying to myself something like, well their young and struggling, well he served in the military, he makes such little money. But I need to stop doing that, I am so under pricing some of my returns it's ridicules.

[MAMalody]

Maybe what you can do is raise your base fee per Jack's suggestion (or whatever you feel is correct) and then when you find a case that merits a discount, extend one. This will allow you to have a more appropriate fee structure and then accomodate those that you feel are on the line or need the help. I would also show that discount on their invoice so they realize that you have given them a "Good Customer Discount" and so they realize the full value of your services.

[michaelmars]

You are a professional and deserve to charge according to your skills, knowledge and experience. To undercharge is to steal from yourself.

I instituted a 25% increase in my base fee. One complaint, lost one client, had one question why and 236 that did not even hesitate when I told them the amount.

I go up 3-5% every year, just because cost of living goes up then I adjust for complexity.

[HV Ken]

You are a professional and deserve to charge according to your skills, knowledge and experience. To undercharge is to steal from yourself.

I instituted a 25% increase in my base fee. One complaint, lost one client, had one question why and 236 that did not even hesitate when I told them the amount.

One of the best talks I heard on this topic:

If you raise your fees 10%, will you lose 10% or more of your clients?

If yes, then you need to consider if that is the correct increase.

If no - if you raise your fees 20%, will you lose 20% or more of your clients?

If yes, then you need to consider if that is the correct increase.

If no - if you raise your fees 30%, will you lose 30% or more of your clients?

If yes, then you need to consider if that is the correct increase.

etc.

So, to put it into practice: If you raise your rates 25% and lose 15% of your clients, isn't that a favorable exchange? You make more money and have more available time.

[HV Ken]

I agree, my problem is I'm always saying to myself something like, well their young and struggling, well he served in the military, he makes such little money. But I need to stop doing that, I am so under pricing some of my returns it's ridicules.

You can still have a heart! When you do decide to offer a discount, show them the full rate and clearly identify the discount and the reason. Then if you ever pull the discount (maybe their finances have turned around and they are no longer struggling), it won't be a surprise and you won't hear, wow - your rates really went up.

[HV Ken]

You are a professional and deserve to charge according to your skills, knowledge and experience. To undercharge is to steal from yourself.

I instituted a 25% increase in my base fee. One complaint, lost one client, had one question why and 236 that did not even hesitate when I told them the amount.

Hi Jack - how did you communicate the 25% base fee increase? And when in the calendar did you communicate this?